CML: Age of FTB

Percy1983

I see your point, but with higher house prices and the average age of the FTB getting older its just not the same.

In our case we have had said promotions just to buy and we aren't going to have many years between buying and having children as we are so much older when buying.

I am not going to say its impossible, but certainly much harder.

IveSeenTheLight

Percy1983 wrote: »

I am not going to say its impossible, but certainly much harder.

Indeed.
The facts are however we have just came through a golden age of opportunity to become home owners.
Prior to that it was even harder if nigh on impossible.

There have been many immprovements through the decades and the sad thing is that many seem to take them for granted and not realise how much worse it could be.

We are extremely fortunate to live in the location we are.
There are many locations around the world where we could have been less fortunate to be brought up in.

geneer

IveSeenTheLight wrote: »

I'll not profess to say that it's absolutely possible in all areas, but certainly in many parts it is



It was nine years from when we first bought to when we had children.
That's nine years of opportunity to reduce the mortgage debt as far as possible.
In that tiime, generally there is opportunities to increase wages and or gain promotion, thus income increases whilst the debt decreases.
My wife is stay at home and will do so until both my kids are at school, so we planned at around 7 years of reduce family income.

I'll not profess it's easy, simple or ideal, but it is certainly possible

Thats nice lite.
If you'd made the same decision to buy in 2007 rather than 2002 someone might give a hoot.

ukcarper

IveSeenTheLight wrote: »

That's one way of looking at it, but what does the data mean.

The make-up of how mortgages are financed I would consider has changed over time, with far more emphasis on joint incomes.

If the data (as I understand it) is taken on average wages calculated from the ONS, then this is comparing a single wage to what generally is joint wages for mortgages.

That naturally would explain why the income multiplier has increased.

However there are other indices to consider as in from an affordability perspective.
According to Halifax the: -
Mortgage Repayments as a percentage of income is currently 27.8% as opposed to the long term (28 year) average of 36.7%.

Moving back on to prices
House Prices - Earnings Ratio is currently 4.30 as opposed to the long term (28 year) average of 4.06.
This represents that house prices are only 5.9% above their long term average.

I think your reading too much into it, all I am saying is that compared to the long-term average prices are high.

Looking at latest Nationwide release the figure is about 5x.

IveSeenTheLight

geneer wrote: »

Thats nice lite.
If you'd made the same decision to buy in 2007 rather than 2002 someone might give a hoot.

I didn't buy in 2002.
Your not one for getting facts right are you.

I bought in 2000, 2004, 2007 and am planning to offer again this Friday.

Maybe if you had made the decision to buy in 2005, you wouldn't be so desperate for price falls to counter your "real term" losses

IveSeenTheLight

ukcarper wrote: »

I think your reading too much into it, all I am saying is that compared to the long-term average prices are high.

Looking at latest Nationwide release the figure is about 5x.

All I'm saying is there are many indices and many factors.

You've chosen the Nationwide stat, but you should consider the make up of the data.

Why is it that the Nationwide showing a 5x multiplier whilst the Halifax are showing the multiplier as 4.3?
Both appear to represent a 4 x multiple as the average.

Lenders also use multipliers as one method of calculation but as I understand it put more weighting into the affordability of the mortgage, which as I have shown is currently lower than the long terms average

IveSeenTheLight

IveSeenTheLight wrote: »

Quote me.
Where have I said "the higher the price you pay, the better"?

I knew you couldn't.
Theres a lesson here, be prepared to back up your ascertations and statements about what other posters have previously proclaimed.

I certainly would appreciate for clarity if when you quote me, you put an actual link to the quote.
Otherwise it's likely to be ficticious lies.

ukcarper

IveSeenTheLight wrote: »

All I'm saying is there are many indices and many factors.

You've chosen the Nationwide stat, but you should consider the make up of the data.

Why is it that the Nationwide showing a 5x multiplier whilst the Halifax are showing the multiplier as 4.3?
Both appear to represent a 4 x multiple as the average.

Lenders also use multipliers as one method of calculation but as I understand it put more weighting into the affordability of the mortgage, which as I have shown is currently lower than the long terms average

I don’t dispute any of that and just because house prices are above long-term average it doesn’t mean they are less affordable or that they will fall to that long-term average. Do you dispute that house prices are above long term average.

Percy1983

IveSeenTheLight wrote: »

I didn't buy in 2002.
Your not one for getting facts right are you.

I bought in 2000, 2004, 2007 and am planning to offer again this Friday.

Maybe if you had made the decision to buy in 2005, you wouldn't be so desperate for price falls to counter your "real term" losses

So HPI has gave you a nice boost along the way then.

IveSeenTheLight

Percy1983 wrote: »

So HPI has gave you a nice boost along the way then.

Definately, I don't dispute that.
Indeed, without HPI, I would have struggled to upsize at the time

As an example: http://forums.moneysavingexpert.com/showpost.php?p=41106026&postcount=28

If you put down a 10% deposit on a £100k property you have £10k equity on a 90% LTV

If prices stay the same and you want to upgrade to a £200k property, you need to find an additional £10k, deposit just to meet a 90% LTV product.

If prices lowered 20%, you'd be in NE to the tune of £10k.
So to buy the property now valued at £160k (£200k -20%) you'd need to find the additional £10k NE + £16k (£26k) deposit for the 90% LTV

If prices rose by 20%, you'd have £30k equity (£10k initial deposit + £20k increase in property value.

That £30k would allow you to put down a 12.5% deposit on the £240k property.

Putting it simply in this scenario: -
Prices remain the same = Additional £10k deposit required
Prices drop 20% = Additional £26k deposit required.
Prices rise 20% = No additional deposit required.

If credit is available then it's easier to upsize in a rising market than a falling one.

Sure you'd be paying more for the property in a rising market, but that is something you can calculate if you can afford or not in your options.
In a falling or stagnant market, you may not have that option at all.

The small caveat to the above is that over time, with a capital repayment scheme, you would also be increasing your equity.